Mankun Research | Web3 Civil and Commercial Lawyer "Survival Guide": Detailed Explanation of Business Panorama + Trend Challenges!

Every Thursday at 7:30 PM, the Encryption Pub opens on time! From investment jargon, entrepreneurial stories, hot topic rants, to track predictions and Compliance pitfalls… we use the AMA format to discuss what you want to hear, with industry experts gathered! No limits on themes, easy chats about Web3! In the face of sudden regulatory winds and high Compliance costs, senior lawyer Mankun will help you understand the trends and avoid pitfalls! This issue is the 14th edition of the Crypto Tavern, focusing on the daily life of civil and commercial lawyers in the “crypto circle”. Web3 civil and commercial lawyers not only litigate but also deeply engage in on-chain finance, RWA, compliance of funds, and other businesses, helping projects achieve compliance. We invite three experienced lawyers to decode the opportunities and challenges of Web3 legal services, from their personal journeys to practical business experiences!

Guest self-introduction He Fang: Hello everyone, I'm He Fang, currently based in Chongqing. I have 20 years of experience as a lawyer, with the first 10 years focusing on criminal defense, and the last 10 years mainly working on non-performing asset business, having also built a service industry chain for non-performing assets that includes evaluation and auction. Since October last year, I have been collaborating with Mankun and officially entered the Web3 industry. I am very grateful for Maige's invitation and hope to discuss the current situation and future of civil and commercial lawyers in Web3 with everyone today, not only talking about “what we are doing now” but also exploring “what we can do well in the future.” Mao Jiehao: Hello everyone, I am Mao Jiehao from Shanghai Mankun Law Firm. I have been working at Mankun for nearly 3 years, mainly responsible for civil and commercial affairs in the Shanghai area. Our team currently has about 5 lawyers. Over the years, our business scope has continuously adjusted with industry development, exploring both litigation and non-litigation areas, which I can share in detail during our discussion. Peng Haozhe: Hello everyone, I am Peng Haozhe, based in Chengdu, and I am a partner at Weihe Chengdu Law Firm. I officially entered the industry in 2021 and have since been providing civil and commercial legal services for local blockchain companies and Web3 projects in Chengdu. Many clients and lawyers are actually unclear about what civil and commercial lawyers in the Web3 industry can do, and I hope today's sharing can help everyone deepen their understanding of this field. I also look forward to more communication in the future. Q1: How has your journey been from a traditional lawyer to a “crypto” lawyer? Dongdong Robin: The legal industry has multiple directions such as criminal, civil, and commercial law. I would like to ask everyone to share: How did you get involved in the crypto space? How did you transition from a traditional lawyer to a crypto lawyer? What are the differences between traditional lawyers and crypto lawyers? Mao Jiehao: I started as a traditional civil and commercial lawyer, serving state-owned enterprises and the government in the Changning District of Shanghai after graduating with my master's degree. Besides IPOs, my work was quite diverse. From 2020 to 2021, I began to get involved in the cryptocurrency space, starting with trading. Since I leaned towards the on-chain field, I spent a lot of time conducting on-chain research every day—handling traditional business during the day and studying on-chain projects at night. I explored GameFi in 2021 and NFTs in 2022, and I have also participated in NFT investments. In 2022, I was almost 30 years old and needed to determine my long-term career direction. In my opinion, the traditional medicine and real estate industries have limited opportunities for lawyers around the age of 30, while I had studied data law in 2017 and was more willing to explore new industries. At that time, I believed Web3 was the most promising field, and I had a deep enough understanding of Web3 to think that on-chain experience could be translated into legal services, so I decided to transition to being a Web3 lawyer. For me, the identity of a “Web3 person” comes before that of a “lawyer”—if I only approach Web3 business as a lawyer, the order is reversed. In 2022, the legal landscape for Web3 was still very limited, so I first joined a mining company to understand the industry. After Mankun clearly focused on Web3 business in early 2023, I communicated with Honglin and joined Mankun. 80% of Mankun's clients are Web3 native projects or Web2 companies looking to transition to Web3, and with the rising popularity of stablecoins and other areas, more Web2 companies are beginning to enter the field. In the past two years, I have handled over 30 civil and commercial litigation cases involving cryptocurrency, which is a relatively stable business; at the same time, I am also following emerging areas, such as assisting clients with license applications and on-chain risk control Compliance exploration after the Hong Kong bill was implemented in 2023. As a Web3 lawyer, I have to learn new things every day. Although I am uncertain about how the industry will be in 2027, I believe that the development of Web3 is certain, and exploring this field is very meaningful. He Fang: I started my career in 2005, spending the first 10 years in criminal defense, and focusing on non-performing assets for nearly the last 10 years. I also promoted the firm's corporate and professional operations, building a full industry chain service for non-performing assets. Two years ago, when I went to study at the National University of Singapore, I was introduced to encryption digital assets for the first time. After returning to China, through Mankun's media matrix and introductions from industry friends, I visited Honglin in Shanghai several times, and later became an investor in Mankun Shenzhen. Currently, I am focusing my efforts on exploring the composite product of “Web3 civil and commercial lawyer services + traditional business”, such as how to integrate Web3 characteristics into traditional legal services. I have also engaged in many in-depth discussions with Nana and Mag. For me, transformation is not “starting from scratch”, but rather connecting the new demands of Web3 with 20 years of legal and business experience. Peng Haozhe: I had previously been engaged in non-litigation business in civil and commercial matters, such as corporate investment and financing, IPOs, etc. In 2021, many NFT studios and digital collection-related teams emerged in Chengdu. By chance, I came into contact with a company in the Wanxiang ecosystem that focuses on government blockchain, and that's when I entered the industry. Afterwards, I also participated in many early NFT projects, and like Mao Lv, my transition was driven by interest. When I see the mechanism design and Tokenomics of DAOs (like Constitution DAO), I feel that this is a “revolution of production relations”—this precise structure is like a complex machine, which particularly attracts me. Therefore, I gradually shifted my business direction towards the encryption field, mainly focusing on two parts: one is traditional enterprise investment and financing, and state-owned enterprise compliance; the other is encryption business, such as providing domestic compliance advice for local Web3 project teams in Chengdu, and assisting in connecting with overseas lawyers for overseas compliance (such as issuing legal opinions). Many Web3 project teams are physically located in the country and encounter issues faced by traditional Web2 enterprises (such as labor employment and taxation), but they also have specific needs in the encryption field, which is where our service space comes in. Q2: What areas does the cryptocurrency industry civil and commercial business involve? What does the customer profile look like? Dongdong Robin: Many friends who are not familiar with Web3 find civil and commercial business very unfamiliar. I would like to ask everyone to describe: What areas are mainly involved in civil and commercial business in the cryptocurrency circle? What does the customer profile look like? Let's first have Peng share. Peng Haozhe: Based on the customer profile, the clients I have interacted with can be mainly divided into three categories: The first category is Web2 transformation enterprises/individuals: they have achieved success in the Web2 field and want to layout Web3, such as doing RWA, investing in mining farms, and launching NFT/digital collection projects. This type of client needs services that “go beyond traditional lawyers” — not only to solve legal issues but also to understand the industry logic of Web3, helping them avoid transformation risks. The second category is individual clients: for example, early investors in mining companies, individuals purchasing mining machines, or investors participating in cryptocurrency entrusted wealth management. They mainly need solutions for cryptocurrency-related civil and commercial disputes (such as rights protection and contract disputes). The third category is Web3 native project teams: many members come from large companies like Alibaba and Tencent, have technical skills but lack entrepreneurial experience, and are physically located in China. Their services are divided into two parts: domestic compliance (such as labor employment and business model legality) and overseas support (such as drafting investment and financing documents and compliance review in the host country). Overseas businesses often require cooperation with foreign lawyers. In terms of business areas, the core is “Compliance + Dispute Resolution + Transaction Support”: Compliance includes controlling the boundaries of domestic business and applying for overseas licenses; Dispute Resolution mainly involves disputes related to cryptocurrency transactions, lending, and entrusted financial management; Transaction Support includes drafting investment and financing documents and legal due diligence for Token issuance. Mao Jiehao: When I recruit, I usually explain Mankiw's business framework to candidates, which is roughly divided into five major areas. This is also the mainstream direction of the industry.

1. Cryptocurrency litigation: including civil and commercial cases, the core is “on-chain logic disassembly”—for example, in disputes involving the buying, lending, and investment of cryptocurrencies, it is necessary to clearly explain “funding chain, Token flow” to the judge and the opposing lawyer. Currently, there is a significant difference in judicial standards across various regions, and judicial interpretations tend to be “one-size-fits-all,” but this type of business is very stable; I have handled over 30 cases in more than two years.
2. On-chain financial services: Currently, the main focus is on license applications (such as the EU MiCA license and the Singapore MAS license) and on-chain Compliance for payment institutions. The core of this business is “understanding on-chain logic”—for example, anti-money laundering (AML) not only needs to comply with BIS and FATF regulations but also requires risk control based on on-chain data. In the future, as on-chain finance matures, this will be the biggest growth point.
3. Encryption fund business: Although sensitive, the trend is very clear - more and more traditional funds are transitioning to encryption funds. In October 2023, I predicted that 2024 will be the year of “researching US dollar encryption funds,” with implementation starting in 2025. As Bitcoin prices rise and the scale of stablecoins expands, more funds will flow into encryption funds. Our services include fund structure design, compliance due diligence, and filing support.
4. RWA (Real World Asset Tokenization): We started researching RWA after Langxin was implemented last year, and we have been exploring with clients for 10 months. The path is relatively mature, and we are advancing the first deal. The core of RWA is “traditional assets + on-chain tokenization,” such as the tokenization of bills and fund shares, but currently we still face the issue of “clarifying the legal attributes of tokens” (such as whether they belong to security tokens). In the future, we need to combine on-chain finance for in-depth Compliance.
5. Routine Legal and Compliance Services: Providing daily legal advisory services for Web3 projects, such as risk disclosure and legality verification of business models. Domestic operations should avoid bottom-line criminal charges, while overseas operations need to align with local regulations (such as the new stablecoin regulations in Hong Kong). The key is “helping clients understand the risks – there is no zero risk in Web3, the focus is on controllability.” Additionally, it should be noted that civil and commercial lawyers must have “criminal thinking”—many Web3 models (such as Token issuance and DAO operations) may involve criminal risks if they cross the line, necessitating early predictions to avoid clients falling from “civil disputes” into “criminal offenses.” He Fang: I would like to add from the perspective of “niche market + resource integration”: In terms of business areas, in addition to the points mentioned by Mao and Peng, we are also exploring integrated products for “Web3 + traditional business”, such as the tokenization of non-performing assets and payment Compliance in the encryption field (e.g., connecting with traditional payment institutions). Regarding client profiles, I often encounter “Web3 participants with traditional resources”, such as business owners who hold a large amount of physical assets (like factories and bills) and want to engage in RWA, or institutions that wish to activate assets through encryption funds. These clients require a composite service of “law + business” — they not only need to understand the law but also need help connecting with on-chain resources (such as technical teams and fund managers). For example, recently there have been listed companies and power plants consulting about RWA. They not only need legal solutions but also need to know “how to find buyers and how to design the token circulation mechanism.” This requires us to leverage industry resources, rather than just providing isolated legal services. Q3: What is your judgment on the demand trend for legal services in the cryptocurrency industry? Dongdong Robin: The current global regulation is advancing (such as the stablecoin draft in the United States and the new stablecoin regulations in Hong Kong). I would like to ask everyone to judge: What trends will there be in the market demand for legal services in the cryptocurrency space? First, let's have Peng Lv share. Peng Haozhe: Demand trends are highly correlated with regulatory dynamics. I have observed two obvious directions: The first is “Domestic Compliance Demand Refinement”: for example, the recent new social security regulations have attracted attention not only from traditional enterprises but also from many Web3 teams who are consulting about it — their core teams are overseas, but they have developers and marketers in China, needing to clarify “whether to pay in USDT or RMB” and “how to determine the labor relationship” and “the compliance of social security contributions.” Such demands of “traditional issues + encryption scenarios” will become increasingly common as Web3 teams operate more compliantly in China. The second is “Normalization of Overseas Compliance Demand”: after the implementation of the US MiCA and the new stablecoin regulations in Hong Kong, clients are no longer just asking “can we do this?” but are now asking “how to do this compliantly” — for instance, stablecoin issuers in Hong Kong need to meet capital adequacy ratios and reserve asset requirements, and we need to connect clients with Hong Kong lawyers to outline the application process while ensuring that domestic operations do not conflict with overseas compliance. In addition, the popularity of RWA will drive the demand for “traditional asset rights confirmation + on-chain Compliance” - for example, when a company tokenizes notes, it needs to first resolve the ownership issue of the notes, and then design a Compliance mechanism for on-chain circulation. This is the collaboration point between traditional lawyers and Web3 lawyers. He Fang: I would like to add from the perspective of “risk education + market cultivation”: Currently, many people's understanding of Web3 remains at the level of “speculation,” and they are even misled by CX and Ponzi schemes, which will create a demand for “risk education + dispute prevention” — for example, providing “Web3 legal literacy” for ordinary investors to help them identify scams; offering “compliance checkups” for small and medium project parties to avoid crossing boundaries. In the long run, “compliance” will be the core trend — as old money (such as traditional financial institutions) enters the space, customers' demands for “compliance” will be higher, no longer allowing for “barbaric growth,” but requiring “traceable and regulatable” legal solutions. For example, encryption funds will need to be registered and disclose information like traditional funds in the future, which will require lawyers to provide standardized compliance services. In addition, the demand for Web3 in the Sichuan-Chongqing region is rising. We plan to connect with Mankun to implement the experiences from Shanghai and Shenzhen in the southwest, exploring local RWA and government blockchain needs — for example, there are many manufacturing enterprises in Chongqing, with a large number of physical assets that can be tokenized, which presents an opportunity in the regional market. Mao Jiehao: I focus on the trends of RWA and DeFi Compliance, two hot topics. The legal services for RWA are currently in an “early exploration phase”, but in the future, it will become “normalized”: the core basis is the scale of RWA - currently, the on-chain RWA scale has reached 26-27 billion USD, growing by 50%-60% this year, and is highly related to the scale of stablecoins (the larger the stablecoin scale, the larger the RWA funding pool). The current pain point is the “unclear legal attributes of tokens” (for example, after fund shares are tokenized, the relationship between the tokens and net value, and whether they are considered securities), but as regulations become clearer (for instance, Hong Kong's definition of security tokens), this demand will shift from “exploration” to “standardization”. Defi compliance will become a “key support” for RWA: many RWA products (such as fixed income tokens) need to release liquidity through Defi protocols (such as staking in protocols like Morphy), but the compliance issues of Defi (such as whether it falls under “illegal financial activities”) have not yet been resolved. In the future, the demand for Defi compliance will explode - for example, helping Defi protocols design “compliant liquidity mechanisms” to ensure that RWA tokens flow legally on-chain, which is the core competitiveness of Web3 lawyers. In addition, the demand for encryption funds will continue to grow: starting in 2025, as Bitcoin prices stabilize and the scale of stablecoins expands, more funds will enter encryption funds. Our services will shift from “architecture design” to “post-investment Compliance” (such as asset custody and information disclosure), which requires combining traditional fund experience with the characteristics of the encryption field. Dongdong Robin: Can Mao Lyu elaborate on the legal service challenges and prospects of RWA? Lawyer Mao Jiehao: The difficulties and prospects of legal services for RWA focus on the “adaptation of traditional assets to on-chain logic”:. Challenges: First, “Clarification of Legal Attributes” - for example, after the tokenization of fund shares, is the token a “security” or a “commodity”? If classified as a security, it must comply with securities regulatory rules (such as the SFC license in Hong Kong), but currently, there is no unified standard globally for the “attributes of asset tokenization”, requiring case-by-case demonstration; Second, “Risk Isolation” - traditional assets (like notes) carry default risk, how can the rights of token holders be protected? It is necessary to design a “reserve asset custody and default recovery mechanism”, which involves the integration of traditional law (like trust law) and on-chain technology (like smart contracts). Outlook: As traditional institutions enter the market (such as banks and fund companies engaging in RWA), legal services will shift from “single legal solutions” to “full-process support” - for example, helping clients with “asset confirmation → token design → compliance issuance → circulation supervision” as a complete chain of services, while also coordinating with technical teams (such as smart contract audits) and custodial institutions (like reserve asset custody). In the future, RWA will become the core scenario of “WEB3 connecting traditional finance”, and the market space for legal services will be very large. Q4: In light of business practices, how to understand Hong Kong's role in Web3 for the mainland? Dong Dong Robin: Hong Kong is viewed by many as the “gateway to China's Web3”. I would like to ask everyone to discuss Hong Kong's role in relation to the mainland from a business practice perspective. First, please, Lawyer Mao Jiehao. Mao Jiehao: Hong Kong's core role is as a “window for exploration + a connecting bridge:” From the perspective of the “exploration window”, Hong Kong's regulation is “radical within conservatism”—for example, the new regulations on stablecoins clearly define issuance standards while also limiting circulation scope (such as only for professional investors). This “controlled trial and error” model can provide a reference for the mainland. Although Hong Kong's regulation sometimes seems conservative, compliance for on-chain businesses is inherently complex; being “a bit slower” can actually help avoid risks. For instance, Hong Kong's definition of security tokens may influence the regulatory thinking of the mainland in the future. From the “connecting bridge” perspective, the mainland will not fully open Web3 in the short term, but Hong Kong can serve as an “interface between the mainland and the global Web3 market”—for example, if mainland companies want to engage in RWA, they can first pilot in Hong Kong (such as utilizing Hong Kong's legal system for asset rights confirmation and token issuance); if mainland investors want to participate in encryption funds, they can do so through compliant channels in Hong Kong (such as licensed institutions). The Hong Kong license applications and encryption fund filings we are currently assisting clients with essentially leverage Hong Kong's bridging role to connect mainland clients to the global market. Peng Haozhe: I agree with the positioning of the “sandbox”. Hong Kong's regulation is the 'touchstone for the Mainland' - the Mainland neither wants to miss the opportunity of Web3 nor fears the impact of decentralization on financial security. Hong Kong's pilot can help the Mainland 'observe risks and accumulate experiences'. For example, Hong Kong's stablecoin issuance mechanism and encryption fund filing system, if effective in the future, may be promoted in the Mainland's free trade zones and science and technology parks. For Mainland clients, Hong Kong is a 'springboard for compliance going overseas' - for instance, if Chengdu's Web3 team wants to enter the overseas market, they can first establish a presence in Hong Kong, leveraging Hong Kong's legal status (such as common law system and international recognition) to connect with overseas resources; Mainland enterprises doing RWA can issue tokens through Hong Kong's exchanges to attract global investors while avoiding regulatory risks in the Mainland. He Fang: From the perspective of “individual and corporate needs”, Hong Kong also has the role of “resource aggregation”: For individuals (such as lawyers and practitioners): Hong Kong is a “hub for Web3 professionals”— currently, there are not many lawyers deeply engaged in Web3 in Hong Kong who have achieved results. Mainland lawyers can enter the international market through licenses in Hong Kong, accessing higher quality clients (such as global crypto funds and multinational Web3 companies). For enterprises: Hong Kong is the “intersection of Web3 and traditional finance”— for example, mainland banks that want to engage in crypto asset custody can establish subsidiaries in Hong Kong for pilot projects; traditional funds looking to enter the crypto space can issue products through licensed institutions in Hong Kong. We plan to explore joint ventures in Hong Kong, aiming to leverage Hong Kong's resources to help mainland enterprises connect with overseas capital and technology, while also revitalizing mainland physical assets (such as non-performing assets and bills) through Hong Kong's RWA market. Q5: Finally, share your insights on the Web3 industry in one sentence! Dongdong Robin: Today's discussion was very in-depth, from “transformation journey” to “business areas,” and then to “future trends,” with all three guests sharing valuable experiences. Finally, I would like to ask everyone to summarize their insights on the Web3 industry in one sentence. Mao Jiehao: Web3 is a fast-paced industry, but as a lawyer and in business, one must “endure the loneliness” and be patient to delve deep, in order to establish a foothold in the wave of Compliance. Peng Haozhe: Stay curious and keep learning — there are too many new things in Web3, and only by continuously accepting new knowledge can one avoid being eliminated from the industry. He Fang: The core of Web3 is “connection”; lawyers not only need to understand the law but also act as “resource integrators” to help bridge the gap between traditional and Web3, thereby creating greater value. Welcome to follow the guests and the official account, and suggest topics you would like to hear. See you again every Thursday at eight o'clock in the evening, thank you all!

Original Author: Mankun Brand Department